January 10, 2006
Mr. Steven Jacobs, Branch Chief
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Re: Systems Management Solutions Inc.
Form 10-KSB for the year ended June 30, 2004
Form 10-QSB for the quarter ended September 30, 2004 and December 31, 2004
File No. 000-30803
Form 10-KSB/A for the year ended June 30, 2004
Item 6, Management's Plan of Operations
1. "We note in your response that you have agreed to comply with our comments
1,2 and 3 as they relate to required MD&A disclosures. However, we also note
that these disclosures have not been made in the amended Form 10-KSB for the
period ended June 30,2004 or in the Form 10-KSB for the transition period ended
December 31,2004. Please advise us why you did not include the required
disclosures in the aforementioned documents and confirm to us that you intend to
include the following disclosures, as appropriate, in all future filings with
the Commission:
o A discussion of how you anticipate that you can satisfy your current
cash requirements on a short-term and long-term basis in accordance
with Item 303(a) of Regulation S-B
o The drivers of all material changes from period to period, including
any significant elements of income or loss that do not arise from
continuing operations
o Identification and discussion of your critical accounting policies
in accordance with FR-60"
Company Response:
It was an oversight on the part of the company to not give a more direct
response and include the above mentioned disclosures. The company intends to
include clearer, more direct discussion in future filings, including the
upcoming December 31, 2005 10-KSB.
Consolidated Statement of Cash Flows
2. "We note your response to comment 6. Please summarize for us the historical
cash flow impact of the series of transactions related to the $777,473 advance
you received for the majority shareholder of BioLynx for each period. Advise us
of the effects of the initial advance, the loan to BioLynx and the subsequent
impairments of the loan receivable form BioLynx as they relate to your
consolidated statements of cash flows."
Company Response:
o Please note, Aspect (formerly BioLynx) was a related party to
Systems Management Solutions (formerly Supreme Holdings) prior to
the acquisition of Aspect on July 1, 2003.
o During the period ended December 31, 2002, $300,000 was loaned to
Systems Management Solutions from a shareholder and invested in
Aspect. As of December 31, 2002, the $300,000 investment was
impaired. For Systems Management Solutions' cash flows purposes,
this would have been classified as proceeds from shareholder loans
in the amount of $300,000 in financing activities, and an investment
in Aspect for $(300,000) under investing activities, as well as an
add back for $300,000 of impairment under operating activities.
o During the period ended June 30, 2003, $477,473 was loaned to
Systems Management Solutions from a shareholder and invested in
Aspect. As of June 30, 2003, the $477,473 investment was impaired.
For Systems Management Solutions' cash flows purposes, this would
have been classified as proceeds from shareholder loans in the
amount of $477,473 in financing activities, and an investment in
Aspect for $(477,473) under investing activities, as well as an add
back for $477,473 of impairment under operating activities.
o On July 1, 2003, Systems Management Solutions purchased Aspect. At
that time, Aspect still had notes payable to Systems Management
Solutions in the amount of $777,473 reflected in its books. Due to
the fact that Aspect and Systems Management Solutions were related
parties, the payable was debited for $777,473 on Aspects books and
credited to additional paid in capital. This is a non-cash item for
the consolidated cash flows for the period ending June 30, 2004.
Note 10-Equity
3. "In a previous comment, we asked you to clarify whether the conversion rate
for your Series A Cumulative Convertible Preferred Stock was fixed at a rate of
$.20 per share, or if the rate was determined based upon the fair market value
of the common stock at the date of conversion. You did not respond to this
question, but advised us that it would be discussed in future filings. We note
that this disclosure was not clarified in the amended Form 10-KSB for the period
ended June 30, 2004 or the Form 10-KSB for the transition period ended December
31, 2004. Please advise us why the disclosure was not addressed in the
aforementioned documents and confirm to us that you intend to clarify the
disclosure in all future filings with the Commission, as applicable."
Company Response:
The conversion rate of the Series A Cumulative Convertible Preferred Stock was
fixed at a rate of $0.20 per share. The conversion rate will be clarified in
future filings as applicable.
Note 13 - Restatements of Previously Reported Financial Statements
4. "Please advise us why you did not file an Item 4.02 8-K in connection with
the restatement of your financial statements for the year ended December
31,2002, as well as your intentions to file one in the future."
Company Response:
It was an oversight on the part of the company when it did not file a Form 8-K
in connection with the restatement of the company's financial statements for the
year ended December 31, 2002. The company intends to file a Form 8-K 4.02 as
soon as possible.
If you have any questions, please do not hesitate to contact us at 210-541-9100.
Regards,
James Karlak
President and CEO
Systems Management Solution, Inc.
7550 IH10 West 14th Floor
San Antonio, TX. 78248